Properties are often transferred between family members with a residual right to occupy the property being retained. Whether or not a proper liferent is created, the existence of this right can cause difficulties when it comes to dealing with a transfer of the property at a later date, particularly if the liferenter has lost capacity to renounce their rights or consent to the sale of the property.
The Registers of Scotland guidance on termination of liferents draws an important distinction between proper liferents and improper (or beneficial) liferents. In proper liferents, the liferenter is vested directly with an interest in the land and said interest is registered against the property. In improper liferents, also known as Interest in Possession Trusts, the liferenter enjoys the benefit of property by way of a trust. Improper liferents are not registrable.
Termination of proper liferents
A registered liferent, when terminated, is removed from the title sheet of the property only on receipt of evidence of its termination. If a transfer of the property is in prospect, the evidence of the liferent's termination can be submitted with the application for registration of the transfer, without any need for a separate application for termination, although a stand-alone application for registration of the termination is also competent.
The most common modes of termination of liferent
1. Death of the liferenter
The necessary evidence is the extract death certificate for the liferenter. Foreign death certificates, if necessary accompanied by certified translations, are acceptable. Other forms of evidence may also be appropriate, such as confirmation of executors of the deceased liferenter.
2. Expiry of the term of the liferent
If a liferent was created for a fixed period of time then the necessary evidence to have the liferent interest removed from the register is the deed (or a copy of the deed) that created the liferent interest and specified the fixed term or the date of expiry.
3. Occurrence of some specified act or event.
If the liferent expires upon the occurrence of a specified event, then the necessary evidence to discharge it is both:
- the deed (or a copy of the deed) that created the liferent interest and specified the act or event that triggered termination; and
- official documentary evidence relating to the occurrence of the act or event, e.g., extract marriage certificate if the event was the marriage or remarriage of the liferenter, or extract birth certificate if the event was (say) the liferenter's 25th birthday. Affidavit evidence may be used instead if official documentary evidence does not exist.
4. Discharge or renunciation
Perhaps most commonly encountered is the voluntary discharge or renunciation of a liferent that is no longer required, perhaps if the liferenter has moved to sheltered accommodation or a care home. The necessary evidence to present to the Keeper in this case is the deed executed by the liferenter either specifically renouncing the liferent or consenting to a sale of the subjects free of the liferent.
Termination of Improper liferents
An interest in possession can be terminated in accordance with the provisions of the trust deed (if permitted), on the death of the liferenter, or the liferenter otherwise bringing their interest to an end if the terms of the trust allow for this.
Standard Security over a Liferent Interest
It is theoretically competent to grant a standard security over a liferent interest. However, it is unlikely that any lender would accept such a security, given a liferent is intransmissible. However it is not precluded by the Conveyancing and Feudal Reform (Scotland) Act 1970
Because liferenters may be elderly and infirm, the question of their mental capacity sometimes arises in relation to the discharge or renunciation of liferents. A discharge or renunciation by an attorney on behalf of a liferenter is acceptable only if the power of attorney specifically permits the attorney to sign such a renunciation. In other circumstances, the appointment of a guardian or authorised person to manage an adult's affairs in terms of part 6 of the Adults with Incapacity (Scotland) Act 2000 is probably the only recourse.
Please contact a member of our team to discuss the creation, discharge or termination of a liferent.